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Asian firms to see steady earnings growth in 2018: Moody's
24 Nov '17
2 min read
Steady economic expansion and corporate earnings growth will underpin the stability of credit quality for corporations in Asia, except Japan, in 2018, while refinancing requirements will also be manageable, Moody's Investors Service said. Moody's has stable outlooks for steel, refining and marketing, telecom and power sectors in Asia and China property.
The gradual normalization of monetary policy will support the near-term liquidity needs of corporations in the region, said Chris Park, Moody's associate managing director citing the company’s recent report ‘Non-financial corporates -- Asia (ex-Japan), 2018 Outlook’.
Chinese corporations will witness a GDP growth of 6.6 per cent and operating-efficiency gains and stable commodity prices will support moderate revenue and cash flow growth. Credit profile improvements will continue in Indian corporations on healthy earnings growth, underpinned by solid economic growth and increased production capacity.
About 88 per cent of investment-grade companies and 68 per cent of non-investment grade companies had stable outlooks at end-October 2017, up from 63 per cent and 55 per cent respectively a year ago, according to a press release from Moody’s.
Moody's expects that G-20 growth will be slightly above 3 per cent in 2017 and 2018, up from 2.5 per cent in 2016, while China's GDP growth will slowly decelerate in 2018 as less policy stimulus is provided, said Park.
The number of negative rating actions in Asia will also decline on these healthy macro conditions and stable liquidity.
"However, a potential protectionist turn in US trade policy could pose risk to trade-reliant economies," says Park.
Further downside risks include military confrontation on the Korean Peninsula, causing the loss of production in Korea and disruptions in the region's supply chains; and a significant deceleration in China's growth because of ineffective reform measures and the knock-on effects for Asian corporations.
On the other hand, upside risks include China's growth accelerating on major stimulus programs, boosting regional economic growth and corporate earnings; and stronger-than-expected growth in the United States and the European Union, together with limited disruption from US interest rate normalization, leading to increased exports and earnings for Asian corporations. (DS)
The gradual normalization of monetary policy will support the near-term liquidity needs of corporations in the region, said Chris Park, Moody's associate managing director citing the company’s recent report ‘Non-financial corporates -- Asia (ex-Japan), 2018 Outlook’.
Chinese corporations will witness a GDP growth of 6.6 per cent and operating-efficiency gains and stable commodity prices will support moderate revenue and cash flow growth. Credit profile improvements will continue in Indian corporations on healthy earnings growth, underpinned by solid economic growth and increased production capacity.
About 88 per cent of investment-grade companies and 68 per cent of non-investment grade companies had stable outlooks at end-October 2017, up from 63 per cent and 55 per cent respectively a year ago, according to a press release from Moody’s.
Moody's expects that G-20 growth will be slightly above 3 per cent in 2017 and 2018, up from 2.5 per cent in 2016, while China's GDP growth will slowly decelerate in 2018 as less policy stimulus is provided, said Park.
The number of negative rating actions in Asia will also decline on these healthy macro conditions and stable liquidity.
"However, a potential protectionist turn in US trade policy could pose risk to trade-reliant economies," says Park.
Further downside risks include military confrontation on the Korean Peninsula, causing the loss of production in Korea and disruptions in the region's supply chains; and a significant deceleration in China's growth because of ineffective reform measures and the knock-on effects for Asian corporations.
On the other hand, upside risks include China's growth accelerating on major stimulus programs, boosting regional economic growth and corporate earnings; and stronger-than-expected growth in the United States and the European Union, together with limited disruption from US interest rate normalization, leading to increased exports and earnings for Asian corporations. (DS)
Fibre2Fashion News Desk – India
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